NAI(NAII) - 2025 Q1 - Quarterly Report

Financial Performance - Net sales for the three months ended September 30, 2024, were $33.15 million, a 2$33.97 million for the same period in 2023[97]. - Private-label contract manufacturing sales decreased by 5% to $30.63 million, primarily due to reduced orders from a larger customer[87]. - Patent and trademark licensing revenue increased by 42$2.5 million, up from $1.78 million in the prior year[88]. - Gross profit for the three months ended September 30, 2024, was$2.26 million, representing a gross profit margin of 6.8%, down from 9.2% in the prior year[97]. - Loss from operations was $1.84 million, a 238$0.54 million in the same period last year[92]. - Selling, general, and administrative expenses rose by 11% to $4.1 million, primarily due to increased compensation and legal fees[101]. - Cash used in operating activities was$3.4 million for the three months ended September 30, 2024, compared to cash provided of $4.5 million in the same period last year[104]. Strategic Initiatives - The company plans to continue focusing on expanding its beta-alanine patent estate and developing new sales channels in the Wellness and Healthy Aging markets[94]. - The new product TriBsyn™ was announced in August 2024, aimed at enhancing market penetration in the Wellness and Healthy Aging segments[89]. Financial Position and Liquidity - As of September 30, 2024, the company had$12.5 million of borrowing capacity on its credit facility, with outstanding borrowings of $5.4 million[109]. - As of September 30, 2024, the company had$10.2 million in cash and cash equivalents, with $9.9 million held by NAIE[110]. - The company anticipates non-compliance with financial covenants related to net income requirements and fixed charge coverage ratio in the next two quarters of fiscal 2025[110]. - The company is negotiating a potential revised credit facility or waiver with Wells Fargo, which has not yet exercised any options under the Credit Agreement[110]. - There is no assurance that the company will successfully negotiate a revised credit facility or the terms of such a facility[110]. - As of September 30, 2024, the company did not have any off-balance sheet debt or significant relationships that could materially affect its financial condition[111]. - Recent accounting pronouncements are discussed in the notes to the consolidated financial statements, with no material effects on financial position or results of operations identified[112].